Internet sales tax bill to come up at Legislature

A state law could require tax collections from Internet sales, under a proposal discussed at a legislative briefing hosted by the Grand Junction Area Chamber of Commerce.

Steve Durham and Bob Moody, both Denver–area lobbyists representing retail industry clients, presented a proposed resolution backing the measure and urged chamber support for legislation they say will be introduced later in the session now under way in Denver.

Under the proposed law, the state could collect sales tax on all Internet-based sales. The resolution asks state legislators to “consider the potential competitive imbalances that result from the competition between some online retailers and businesses located in our community” and includes a call to “amend the state’s current sales and use tax statutes to adopt the most expansive definition of substantial nexus.” Federal law requires states to have a “substantial nexus” with a seller before requiring that seller to collect sales taxes.

Durham said Internet sales are the fastest-growing segment in the economy and that it remains essentially exempt from sales tax. “This puts local retailers at a significant competitive disadvantage.”

Moody said brick and mortar businesses are going out of business due to Internet sales and called the measure a “fairness issue.”

Durham said revenue estimates are difficult to come by, but his organization believes the state could collect $30 million to $60 million in added sales tax revenues.

He said the tax wouldn’t be subject to an election as required by the so-called Taxpayers Bill Of Rights amendment to the State Constitution because the tax is already due and owed and only requires collection.

Both Durham and Moody said the national trend was towards taxing Internet sales, pointing to such other states as California, where similar laws have been enacted.

Reaction to the proposal was lukewarm among those attending the chamber briefing.

“I think inevitability is a cheap argument,” said Mesa County Commissioner Steve Aquafresca. “I don’t believe it is, nor has to be inevitable.”

While the county commissioners haven’t a position on the issue — and won’t until the details of a bill are examined — Aquafresca said the commissioners could see the high costs of administrating such a measure.

Others pointed out that many local businesses also conduct sales online, and could be hurt by the measure. Some questioned the revenue forecasts, noting that some major retailers already collect sales taxes on their transactions, limiting the effect legislation would have on state revenues.

Kelly Sloan is a Grand Junction resident, freelance journalist, small business owner and Centennial Institute fellow on energy and economic policy. He specializes in public policy and political communications.